The Commerce Journal

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Discussion

February 15, 2013

Economist urges look at sequestration

also gives warning l-3 could be impacted by legislative inaction

By Joseph Hamrick The Commerce Journal

GREENVILLE — A major player in Greenville’s economy could be impacted by legislative inaction in Washington D.C., John Duca warned attendees of the Greenville Chamber of Commerce’s Economic Forecast Breakfast Wednesday morning.

Duca, vice president of the Federal Reserve Bank of Dallas, asked county residents to keep an eye on the predicted sequestration and its potential impact on L-3 Communications Integrated Systems.

“We need to get past uncertainty,” he said. “What’s going to happen with L-3 when the sequestering comes in two months?”

Sequestration is a series of mandatory budget cuts to federal programs, which will go into effect on March 1 if Congress cannot pass a deficit reduction bill. Approximately $1.2 trillion would be cut in the next 10 years from federal spending.

On Feb. 12, Air Force Chief of Staff Gen. Mark A. Welsh III told the Senate Armed Services Committee that if the sequestration takes place, “It will significantly undermine your Air Force’s readiness and responsiveness today.”

Much of L-3’s business comes from contracts with the Air Force. Cuts in defense spending would have a negative impact on L-3, which could potentially hurt Greenville’s economy.

On a positive note, Duca said the Texas economy, especially the Metroplex, is benefiting from the natural gas surge taking place in the country.

“The Texas economy outperforms the nation,” he said. “Houston and Dallas produce a lot of equipment for fracking.”

Along with benefiting from fracking, Duca said a lot of chemicals can be produced using natural gas, which will continue to fuel the Texas economy.

According to Duca, the housing boom that Rockwall and Royse City is seeing will soon make its way into Greenville.

“Don’t be surprised to see the housing boom coming closer next time,” he said.

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